Editing Harvard

Greg Mankiw writes some complacent nonsense:

At Harvard, we have not instituted any radical reforms in the introductory economics curriculum in response to recent events. We have had some guest speakers, such as John Campbell and Andrei Shleifer, give excellent and well received lectures about the current crisis to assure students that, despite all the uncertainties, economists really are on the case and that the tools of economics are useful in trying to figure out what is going on. But nothing in the current situation makes the basic lessons of economics irrelevant. And the basic lessons are where education needs to begin.

Let's rewrite it, to make more reasonable:

At Harvard, we have realised the economics has been singularly unhelpful in predicting recent economic events, or in providing advice on how to deal with them. In response to this, we have instituted radical reform in economics teaching and research, reaching out to mathematicians, physicists, computer scientists, systems biologists and others who seem to have useful things to say about interacting systems like the economy. We believe that the tools of economics are rather unhelpful in trying to figure out what is going on, and we are urgently trying to improve them.

Update. Harvey Mansfield has a nice summary of what is required:

What has happened in the last few months should give them [i.e. economists] pause. It should make them consider the necessity of looking at economics from the outside, at how it looks and behaves as a whole. There's no way to do this from within economics--no way to formulate an equation that will correctly predict the failure of equations to predict. The idea of prediction itself has to come into question. Prediction is designed to reduce the role of chance in our lives, eliminating unpleasant surprise and replacing it with gratitude and satisfaction. But somehow it doesn't have this effect.